Microsoft revamps reporting on business units, provides clarity on AI benefits

(Reuters) – Microsoft restructured the way it reports results for its business units on Wednesday, moving some ad and news revenue to its Azure cloud computing unit, as the tech giant tries to give investors a clearer picture of AI’s contributions.

The company said it is also shifting revenue from Nuance’s AI and speech technology services to its productivity business, which houses the Office suite of applications, including Word and PowerPoint.

The changes led to a restatement of revenue growth at these divisions for the latest fiscal year and a revised forecast for the September quarter.

The rejigging comes as big tech companies, including Microsoft, face pressure from investors to show that the billions of dollars they’ve invested in AI are paying off.

The company reported a slowdown in growth in its cloud business in July, but said it would accelerate in the second half of fiscal 2025.

The company now expects smart cloud revenue to be in the range of $23.80 billion to $24.10 billion, compared to its previous expectation of $28.6 billion to $28.9 billion.

Microsoft also cut its quarterly guidance for its personal computing segment to between $12.25 billion and $12.65 billion, down from its previous expectations of $14.9 billion and $15.3 billion.

However, it increased the productivity and business process outlook to between $27.75 billion and $28.05 billion, compared to $20.3 billion and $20.6 billion.

(Reporting by Aditya Soni and Jaspreet Singh in Bengaluru; Editing by Arun Koyyur)